Liquidity

Liquidity is a measure of how quickly an asset can be converted into cash without affecting the asset's price. It is an important concept for investors and lenders, as it provides a measure of how quickly they can access the value of their investments.

For example, a company with a high level of liquidity would have the ability to quickly turn its investments into cash and pay its creditors or invest in other opportunities.

Liquidity is often measured using the current ratio, which is calculated by dividing a company's current assets by its current liabilities. A current ratio of 1.0 or higher indicates sufficient liquidity to meet short-term obligations.